Lagging Kenner sales taxes concern city officials

Kenner finished the year with lower-than-expected sales taxes, despite the reopening of Macy's in late October, necessitating a continued hiring freeze for city jobs and a cutback on capital spending.

"Public works last week wanted three more vehicles, " Kenner Mayor Ed Muniz said Wednesday. "I said, 'No way. It's got to be life or death.' It wasn't, so I didn't OK it."

Kenner's sales tax collections are down about 10 percent based on figures for the first half of the 2008-09 fiscal year, compared with the same six months last year -- almost $2 million. Kenner's fiscal year runs from July 1 to June 30.

And in the highly anticipated Christmas shopping month, December 2008 figures were nearly 9 percent below December 2007 receipts, according to the Jefferson Parish Sheriff's Office, which collects taxes.

"It's probably the worst it's going to be all year long, " Muniz said of the sales tax malaise, adding that the biggest sales tax months usually are November and December. Kenner gets the taxes about two months late, so the city got the December figures in February.

However, the biggest drop in one month last year was in September, when sales taxes were $1.8 million, a drop of $1 million from the year before. Hurricane Gustav made landfall on Sept. 1 and residents then faced several days of widespread power outages.

Adding property taxes to the picture, Kenner's revenue is $2.8 million lower than projected for the first half of the 2008-09 fiscal year, said Kenner Chief Financial Officer Duke McConnell.

However, McConnell said, there is some good news: Expenses are not coming in as high as budgeted either.

"The expenditures are under budget, but not enough to handle" the shortfall, he said.

To make up for it, Muniz has asked department heads not to spend more money than necessary. Also, Kenner didn't fill 37 jobs, Muniz said.

He said he will ask the City Council to rescind a law adopted last year requiring that any money saved from unfilled jobs be moved to pay for citywide sewerage repairs.

That amount is expected to be more than $1 million by the end of the fiscal year, McConnell said.

Jobs must be unfilled for six months for the money to revert to sewage, according to the law. Muniz said it would be better for the city to pay for what could be up to $25 million in sewage repairs with loans from the Louisiana Department of Environmental Quality, which will carry an interest rate of under 1 percent.

McConnell said Kenner could be more than $4 million short by the end of the year, about $3.5 million from sales taxes and $600,000 in property taxes. The city might have to go into its surplus to make up the difference but officials are trying to minimize that, McConnell said.

About half of the city's revenue comes from sales taxes, McConnell said, meaning that the lack of consumer confidence hits the city hard.

"I can't make people go out and shop at the mall, " Muniz said, adding that the Macy's opening in October did bump up taxes but not enough to offset losses elsewhere. "Even with Macy's being open it's still down."

The December receipts from taxes at The Esplanade mall were up $14,000 from 2007, to $520,000. That's still down 30 percent from December 2004 -- before Hurricane Katrina hit -- when the mall brought in $770,000, McConnell said.

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Mary Sparacello can be reached at msparacello@timespicayune.com or 504.467.1726.